Posts Tagged ‘minimum wage’

The Road from Minimum Wage to Maximum Subsidies

April 14th, 2014 No comments

By: Jason Staloski
Blog Category: Minimum Wage & the Economy

Domestically, Wal-Mart employs 1.3 million people and grosses 17 billion in annual profits.  This makes them the largest private employer in the United States, and therefore, they set the standard for employee wages at other large retail chains across the country.[1] Over 800,000 of current full time employees at Wal-Mart are paid less than $25,000 a year, which equates to approximately $9.06 an hour.[2] Notwithstanding the billions in profit Wal-Mart continues to make annually, they have been unwilling to provide a sustainable salary to a majority of their employees.

Wal-Mart has devoted a large portion of profits to a share-buyback program. A share-buyback benefits a small group of investors and occurs when a company purchases their own public shares available on the exchange. This action consolidates the amount of owners in the company. Ergo, the same amounts of dividends are distributed over less people. The profit gained from this investment is not predicated on how the company performs. In 2012, Wal-Mart devoted 7.6 billion in buy backs.[3] While buybacks are advantageous for the primary investors of Wal-Mart, predominantly the Walton family, there is no evidence that these buy backs are beneficial to Wal-Mart as a retailer. The buy back program has been expanded over the past four years, and over that four-year period there has been no indication of increases in productivity or a net gain in earnings at Wal-Mart retail locations.

If Wal-Mart would repurpose this 7.6 billion from the buy back program into their workforce, they would be able to provide each employee making under $25,000 a $5.83 raise. This would take the average Wal-Mart employee from a rate of $9.06 an hour to $14.89 an hour. This raise would not only help the individual employee, it would benefit the American taxpayer. The low wage paid to Wal-Mart employee’s costs taxpayers between $900,00 and 1.74 million dollars per store.[4] These subsidies stem from employees not earning a livable wage. Wal-Mart employees rely on government programs for food, health coverage, housing, and transportation, in addition to their salary from the retail conglomerate.

If Wal-Mart would refocus their financial commitments to their front line employees, they would not only benefit their corporation and staff, but the American taxpayer as a whole.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race. 

[1] Ken Jacobs, David Graham-Squire and Stephanie Luce, “Living Wage Policies and Big Box Retail,” University at California Berkeley, Center for Labor Research and Education (April 2011), available at /bigbox_livingwage_policies11.pdf.

[2] Bill Simon, “Goldman Sachs 2013 Annual Global Retailing Conference,” Walmart presentation (September 11, 2013), available at

[3] Renee Dudley, “Wal-Mart Approves New $15 Billion Share-Buyback Program,” Bloomberg  (June 7, 2013).

[4] Nick Hananuer, Testimony before the Subcommittee on Economic Policy, Senate Committee on Banking, Housing, and Urban Affairs (June 5, 2013).

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The Tug-O-War with Minimum Wage

March 17th, 2014 No comments

By: Sarah Phillips

Blog Category: Minimum Wage & the Economy

There has always been ongoing debate about the appropriate minimum wage amount. This is especially true now as recent economic downturns result in a stark reality for those living on a minimum wage.

The main argument against raising the federal minimum wage is business community concerns. While a minimum wage employee is anticipating the wage increase to achieve the obvious objective of making more money, there is concern from the business community regarding the costs, especially for small businesses.   There is also concern that the public (including minimum wage employees) will bear the cost of the raise in minimum wage in the end.  These tensions only add to complexity of the issue.

For many, the most important principle is that people are able to earn enough to support themselves. This is called the “livable wage” argument.   Some businesses believe that the principle behind this argument is more important than costs to the business.  Another solution, one that is more long-term, is to increase job skill training to allow individuals to excel beyond the minimum wage.

As a result of changes in the economy, states began to individually pass legislation to increase their minimum wage to a higher amount than required at the federal level.  Some states, such as New Jersey, are including automatic future increases on account of inflation. On a federal level, the Fair Minimum Wage Act of 2013 would raise the minimum wage and account for cost of living increases. However, even if this legislation is passed, debate is sure to continue about the best way to address the minimum wage.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race. 


The Wharton School, University of Pennsylvania. The Complex Economics of America’s Minimum Wage, Knowledge@Wharton (Nov. 11, 2013),


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The Hidden Cost of a Raise in the Minimum Wage

February 24th, 2014 No comments

By: Joseph Winning

Blog Category: Minimum Wage & the Economy 

Unemployment rates among black teenagers in the United States have been, and will likely continue to be, on the rise. This is a relatively recent phenomenon, according to a news article by Walter Williams of the Columbia Daily Tribune. Up until the late-1950s, black teenagers played a more prominent role in the labor market than their white counterparts. In fact, as far back as 1910, before implementation of the minimum wage, “71 percent of black males older than 9 were employed, compared with 51 percent for whites.” These numbers are starkly contrasted with unemployment rates today among black teens, which are estimated at roughly 40 percent, with some cities reporting unemployment rates among black teens at over 50 percent. By comparison, the unemployment rate among white teenagers today is reported at about 20 percent.

The explanation, according to Williams, is the establishment of minimum wage law in 1938 and the subsequent increases which have followed. This explanation is especially alarming in light of the Fair Minimum Wage Act and state-level pressures to increase the minimum wage. Based on the evidence above, it may come as a surprise to learn that supporters of this recent push for an increase in the minimum wage include the Congressional Black Caucus, President Barack Obama, and black state and local officials. There is no doubt that these political entities are aware of the impact that the minimum wage has on employment opportunities among black teenagers. An explanation for this support, proffered by Williams, is that political pressures from powerful interest groups like labor unions, environmental groups, and business groups have led to trade-offs that block access to labor markets and condemn many black youths to a higher rate of unemployment. Despite paternalistic arguments which might suggest otherwise, it is conceivable that a raise to the minimum wage would do more harm than good by cutting employment opportunities for the many in order to benefit the few.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race.


Walter Williams, Minimum Wage Hikes Costs Blacks Jobs, Columbia Daily Tribune, available at

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Increasing the Federal Minimum Wage: A Lifesaver or a Killer?

January 27th, 2014 No comments

By: Jaclyn Crittenden

Blog Category: Minimum Wage & the Economy

A hot topic in politics today is forcing the middle class to think about a subject that we generally only focus on during election season-raising the minimum wage. While we may not think about it often, low-income employees think about it nearly everyday. According to Obama in his State of the Union address, 19 states and Washington DC currently have minimum wages set above $7.25 per hour, but this blog entry focuses only on the federal minimum wage and its effects on the job market.

More than 30 million full-time workers earn the national minimum wage of $7.25 per hour, making $15,080 a year. That’s just below the federal poverty threshold of $15,130 for a family of 2. As many low-income earners have children to support and are often single-parent households with one adult working, resources are even scarcer than what data can measure.

I spent 10 years before law school working retail for $7.25 an hour and serving tables for $2.23 per hour plus tips, so I have observed the struggle experienced by my co-workers. Luckily, I had my Mom to support me. Now, as a law student who has learned about politics, policy, and economics, I am aware that increasing the minimum wage will have a ripple effect on the economy as a whole. This blog entry does not seek to advocate for or against an increase of minimum wage. Instead, this entry is meant to help readers consider both sides of the debate on the Fair Minimum Wage Act of 2013.

Advocates for an increased minimum wage argue that the extra earnings for the lowest-paid workers would allow families to afford the basic necessities, raise many struggling households above the federal poverty line, and increase economic activity.  It’s estimated that raising the minimum wage to $9.00 an hour, as proposed by the Fair Minimum Wage Act of 2013, would generate between $21 billion-$32 billion for the economy and create between 120,000- 140,000 new jobs. Indexing the minimum wage to inflation, as the proposed legislation also entails, would prevent more families from falling into poverty as costs of living increases over time.

According to opponents of a minimum wage increase, this debate is a question of more-skilled low-wage workers versus less-skilled low-wage workers. Better-educated workers with better skills benefit from the wage increase at the expense of their less-educated, less-skilled counterparts with shorter work histories. Raising the minimum wage increases the cost of labor, rather than increasing the value of labor. As with all things in the marketplace, the more something costs, the less of it is bought; this is as true of workers in the labor market as it is of anything else.

In the meantime, the future for many low paid employees and their families, whether bright or gloomy, hangs in the balance while the Fair Minimum Wage Act of 2013 is hotly debated.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race. 


Antony Davies, James R. Harrington, Raising the Minimum Wage is No Free Lunch, U.S. News Opinion (October 21, 2013),

Obama Minimum Wage Plan Renews Economic Debate, News 2 WCBD-TV Charleston (last updated Feb. 25, 2013 6:22 PM).

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Increased Minimum Wage: A Boost to the Economy

December 30th, 2013 No comments

By: Stephen McLendon

Blog Category: Minimum Wage & the Economy

On September 17, 2013, Pennsylvania State Senator Christine Tartaglione announced new legislation that would increase the state’s current minimum wage from $7.25 to $9.00 by 2015. In 2013, ten (10) states showed increases in their minimum wage from $7.35 to $9.19, which amounts to nineteen (19) states and the District of Columbia having minimum wage rates above the federally mandated level. Is it time for Pennsylvania to join the rest of these states and increase its minimum wage?

An increased minimum wage will help bring people above the poverty line, which means a decreased amount of people using Medicaid benefits and other low-income benefits. It also aids to boost the economy by putting more money in the pockets of those who work, who in turn spend that money in their community. Though this proposed legislation seems good in theory, it is criticized because such an increase does not help those who are unemployed: It makes it harder for the unemployed to find employment.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race.


Sarah Glover, Pa. Lawmaker Proposes Minimum Wage Increase, But Local Economists Aren’t Loving the Idea, (Sep. 17, 2013), available at

Tami Luhby, The impact of a $9 minimum wage,  (Feb. 13, 2013), available at

Melanie Hicken, 10 states to boost minimum wage, (Dec. 31, 2012), available at

The Minimum Wage and Economic Growth

December 2nd, 2013 No comments

By: Joseph Chirdon                                        

Blog Category: Minimum Wage and the Economy

The Fair Minimum Wage Act of 2013 (Act) reignited the minimum wage debate. For decades the minimum wage has failed to keep pace with inflation, causing a steady decline in buying power for minimum wage earners. So, what affect will raising the minimum wage to $10.10/hour, as the Act proposes, have on the economy?

The Economic Policy Institute (EPI) believes raising the minimum wage will help spur economic growth. It estimates the Act will increase wages for 30 million Americans. Low-wage employees are more likely than employers to spend money immediately. Therefore, a monetary shift from employer to employee, over the Act’s implementation, is estimated to increase economic activity by $32.6 billion. Demographically, the EPI estimates, of the employees affected by the Act, 56 percent are female, 46 percent are a racial minority, and 25 percent are parents.

The EPI concluded that the Act would grow the economy, add jobs, and help those impacted most by the Great Recession. The disenfranchised deserve the opportunity to earn a living wage, even if higher prices are passed to the consumer.  After all, “the true measure of any society can be found in how it treats its most vulnerable members.” – Mahatma Gandhi

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race.  


Raising the Federal Minimum Wage to $10.10 would Give Working Families, and the Overall Economy, a Much-Needed Boost, Economic Policy Institute, available at

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